Glenn's Weekly Digest - 2/2/24
Your Weekly Guide to the Startup Universe: Navigating the World of VC & Startups for Students
Stories of the Week
Delaware Court Grounds Musk's Sky-High Pay
Elon Musk’s $56 billion Tesla compensation voided by judge, shares slide [CNBC]
On Tuesday, a judge in Delaware invalidated Tesla CEO Elon Musk's $56 billion compensation package, determining that the board of directors did not adequately demonstrate the fairness of the compensation plan, nor did they present substantial evidence of having engaged in negotiations.
Why it matters: In her extensive 200-page ruling, McCormick highlighted that the compensation package awarded to Musk by Tesla in 2018 was unprecedented, standing as the most substantial in the history of publicly traded companies. This package played a significant role in elevating the Tesla and SpaceX chief to centibillionaire status, making him the wealthiest individual globally. While the plan was lucrative for Musk, it was contingent on Tesla's market value rising by $50 billion or more which was widely considered to be an unattainable goal.
Musk Response: The Delaware Chancery Court holds the distinction of being America's foremost court for business matters. This reputation, coupled with Delaware's highly favorable tax policies and privacy laws for businesses, has prompted a vast majority of companies to choose Delaware as their state of incorporation. Musk quickly reacted on his platform X, urging his followers to avoid registering their companies in Delaware. Following this, he conducted a poll with his almost 171 million followers, questioning whether Tesla should relocate its legal incorporation to Texas, where its main physical headquarters in Austin is located.
What’s next? However, the effectiveness and legitimacy of Texas business courts compared to Delaware's established courts may remain uncertain for several years, potentially taking five to six years to assess due to the lengthy process of legal cases and appeals. Experts emphasize that it's too early to determine the true standing of these new Texas courts in the business legal landscape. It remains to be seen if Musk plans to appeal his ruling to a higher court or follow through on his promise to reincorporate within Texas.
Tech CEOs Navigate Questions in High-Stakes Hearing
Big Tech CEOs survive congressional grilling [Axios]
The CEOs of Meta, TikTok, Snap, Discord, and X (formerly Twitter) faced a Congressional grilling about their platforms' impact on young users. The Senate Judiciary Committee's hearing was emotionally charged, with CEO apologies and tough senatorial questioning.
Why this matters: Executive’s showing at a congressional hearing can have a huge reputational impact on the business and its ability to lobby lawmakers.
Why was this hearing different? The presence of families and victims who have suffered due to social media significantly influenced the atmosphere and proceedings. Their reactions, including applause, laughter, and silence, underscored the personal impact of social media on their lives. This visible and emotional participation of parents and affected individuals heightened the tension and urgency of the hearing, making it notably different from previous tech CEO hearings in Congress. Their presence actively contributed to the intense scrutiny faced by the CEOs.
What will come of this? The recent Congressional hearing on social media underscored a rare instance of bipartisan agreement among lawmakers, transcending their usual political divides. Senators from both parties, including Lindsey Graham and Elizabeth Warren, expressed shared concerns about the impact of technology on society, particularly regarding young people's mental health. Despite this unified stance, Congress has yet to enact significant legislation to regulate social media companies, with most efforts occurring in state legislatures and the courts, focusing on policies like age minimums for social media use.
Top Reads This Week
The Power and The Powder: Inside Reed Hastings’ Life After Netflix [The Information]
In an unexpected twist, The Information catches up with Reed Hastings post-Netflix. He is focusing on Powder Mountain, a ski resort in Utah, which he recently became the majority owner of, investing $100 million. He's transforming it into a luxury destination with exclusive features, balancing this with philanthropic endeavors in education and economic development. Despite his significant business and charitable pursuits, Hastings finds contentment and balance in the simplicity of mountain life, seeing it as a nourishing part of his 'retirement' and philanthropy.
How Silicon Valley Learned to Stop Worrying and Love Middle East Money Again [The Information]
Margaux MacColl and Natasha Mascarenhas discuss the increasing trend of Western tech companies and investors seeking funding from the Middle East, particularly due to the decline in capital from traditional sources. Despite past controversies, including the murder of Jamal Khashoggi, Silicon Valley's interest in Middle Eastern funding has rebounded, with notable investments and partnerships forming. The article highlights the changing expectations of Middle Eastern investors, who now seek more tangible commitments from Western firms in the region.
Top 5 Deals of the Week:
DataSnipper, an Amsterdam based start-up offering an AI accounting assistant, has raised an additional $100 million Series B led by Index Ventures at over a $1 billion valuation.
Benepass, a NYC-based company that offers a flexible benefits platform, raised a $20 million Series A led by Portage and Clocktower Ventures.
Codeium, a startup that offers a free AI powered toolkit for developers to level up their coding ability, raised $65 million in a Series B led by Kleiner Perkins.
Crux, an NYC-based company that has built a marketplace for transferable tax credits, raised ~$18 million in Series A funding led by Andreessen Horowitz.
Nile, an SF startup that offers serverless postgres for modern SaaS, raised an ~$12 million seed round led by Benchmark.
Venture Jobs of the Week
Investor, Alt Capital [San Francisco]
Associate, Coinbase Ventures [Remote]
Investment Partner, M12 [San Francisco]
Managing Partner, M12 [San Francisco]
Associate, Fifth Wall [San Francisco]
Investor, G2 Venture Partners [Bay Area]
Investor, Millennium New Horizons [Palo Alto]
Intern, Costanoa Ventures [Bay Area]
Thank you for joining us for another edition of Glenn’s Weekly Digest! We hope you found valuable insights into the dynamic world of venture capital and startups. If you have any feedback or suggestions, feel free to reach out. Stay tuned for more exciting updates next week!
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